Tracy Alloway: Joe, up until recently, very recently, I would say there are or were two hypothetical blockades that kind of loomed large in the minds of geopolitical strategists everywhere. And the first was, of course, Iran blockading the Strait of Hormuz. That's clearly not a hypothetical anymore. It's actually happened. It's reality. And we've been doing a lot of episodes about it. And so, the big hypothetical blockade that we're left with to ponder is China potentially doing something with Taiwan.

Joe Weisenthal: Definitely. And you know, the only thing I would actually flip them in the sense that I would say the vast majority of discourse has been about the latter, China potentially blockading Taiwan in some way. Um that was the thing that everyone has been talking about for years and years with growing intensity. And then, of course, as you mentioned, now the Hormuz situation, which sort of, I don't know, hit people by their blind spot cuz they didn't think it could ever really happen or whatever really happen has happened. But when this resolves, if this resolves, etc., I believe the question of Taiwan will very quickly return to the fore.

Tracy Alloway: Oh, absolutely. So, as you mentioned, it obviously hasn't happened yet, but people have been writing and thinking about it for years and years and years. And as you know, I consider myself an expert on this topic, having once written a paper in college saying that China was going to invade Taiwan before the 2008 Beijing Olympics. And that obviously didn't happen. But being wrong has never gotten the way of any pundit's career.

Joe Weisenthal: That I would not worry about that. That has never been an issue. As long as it was as as it was well articulated and shared some knowledge, etc., then then you're fine. It was written from a server closet while I was in Beijing. So, it had that going for it. Um but anyway, my point is that this is something that's always sort of looming in the background. And you always see headlines kind of coming up that hint at China-Taiwan tension. So, we actually had one this morning. We're recording on April 21st. The headline is Taiwan's president canceled his visit to Eswatini. Do you know where that is?

Tracy Alloway: No.

Joe Weisenthal: It's a tiny, tiny, um place in Africa. Huh. Um did they did they like, you know, it's interesting cuz there's a few countries still holding out there that recognize Taipei as the unified capital of China. Most of like most of switch, there's a few random ones out there that are still like they they don't recognize the mainland, etc. So, I'm all, you know, all little factoids here and there. I didn't know that. But um So, Taiwan's president's office is citing air route issues. I'm doing air quotes for those who can't see this video. Uh and China pressure. So,

Tracy Alloway: Yeah. Um you do get those kind of headlines every once in a while. And then the one other thing I would say is like, okay, the Strait of Hormuz, the blockade there, clearly an oil story. And oil is something that that powers the entire global economy. But as we've kind of learned over the past six or seven weeks, oil might not actually be the thing that like powers markets, right? If you think about

Joe Weisenthal: True. That's true. The thing that matters for markets, it might be something much closer to AI and semiconductors and valuation, so is cut right. That's totally. I mean, evidently the world could go a few weeks and not grind to a halt if the Strait of Hormuz is closed for a few weeks. I believe the reaction in markets would be and just all around the world and really everything would just be orders of magnitude differently if someone is like, "Oh, no, chips. No chips are coming out." That would be such a bigger deal. And of course, you know, the question of, you know, Taiwan's role in the world, that would all already have been a very big security question even prior to the now constant drumbeat obsession with AI chips, etc. But it only magnifies why this is such a live issue.

Tracy Alloway: Right. So, apparently we can kind of survive a few weeks without oil. Can we survive a few weeks without an actual computer or months? of the a few weeks without a fraction of the a certain fraction. The whereas if we, you know, the chip flow were to be disrupted on that level, it would just be yes, much bigger deal. All right. Well, we do in fact have the perfect guest to talk about all of this. Someone who has just written a book on exactly this topic called Defending Taiwan: A Strategy to Prevent War with China. We're going to be speaking with Ike Freiman. He is also a Hoover fellow at Stanford. So, Ike, thank you so much for coming on Odd Lots.

Ike Freiman: Thanks for having me on.

Tracy Alloway: Here's my first question. You've spent a lot of time in China, including researching this book. Are you going to be able to go back?

Ike Freiman: I think I could go back. The question is whether I could leave. I'm I'm joking. I'm joking. They gave me a hard time at immigration on the way out last time. And I can't do useful research there anymore. It's not like there's archives I can access, interviews I can do. So, the value of it for research is going down for me, but also the risk to my person, the risk to my devices is going up. You know, I do try to engage as much as I can. But I think it's it it's better to engage in third countries.

Joe Weisenthal: Why don't you tell us the the genesis of this book or the origin of it or how you got interested in in in this particular topic?

Ike Freiman: Well, my background is as a China scholar looking at the China's global investment campaign. My first book was about the Belt and Road. And I looked at a bunch of Chinese language sources that show how it works under the hood as a campaign to mobilize the party-state behind Xi Jinping. And then I went on the trail of it to Sri Lanka, to Tanzania, Greece, Greenland, actually. I did my PhD about China in Greenland uh trying to understand how China leverages

Tracy Alloway: You did a PhD about China in Greenland? That is timely. Anyway, keep going.

Ike Freiman: That'll be another book. But uh what I learned in the process of doing this book is that China has this formidable toolkit for blending economic power with its geopolitical objectives. And you know, Taiwan was clearly emerging during COVID as the AI story was heating up as this monumental issue in the structure of the world economy, not just for the old reasons that we care about Taiwan, which is largely about geography. So, it seemed to me reading about this, China had more ships, more planes, more missiles, more drones. What was I missing? Why is the United States not completely outmatched? So, I started this project with a friend of mine named Harry Halem, who's a superstar naval historian. And I asked him, "What's the book I should read to understand what a US-China war over Taiwan would be like, what it would take to win, and then what of those things the US can do or can't do?" And he said, "Well, that book doesn't exist. I can give you hundreds of articles, hundreds of people to follow on Twitter, but no one thing to read." And so, it became this collaboration between two historians, one focused on the economics, one focused on the military, to put the pieces together. And as I did so, I began to discover there's huge gaps in our knowledge of this problem. This is the most complex, multi-disciplinary, multi-functional foreign policy problem that American statecraft has ever faced. Because it's a military problem. It's also an industrial problem. It's a technology policy problem. It's a diplomatic problem, a real one, a complex one, for how we deal with China, with Taiwan, and with the rest of the world. And then finally, it's an economic problem. It's a question of global economic order. Because if Taiwan falls by force or coercion, and China seizes the fabs, the semiconductor fabs, or the fabs are disabled or destroyed, that is a hard reset of the entire global economic system that we have had since 1989 and arguably back to 1945. So, what what comes next? And while we have a lot of good thinking about certain aspects of the scenario, like the war-gaming of what an amphibious campaign would look like and how we stop it, there's other aspects like the economic planning that we just haven't done. So, that was the idea for the book. Pull together the best of existing knowledge, fill in the gaps where we can based on interviews, based on historical work, Chinese language materials, and try to be the person to put the pieces together.

Joe Weisenthal: I want to back way up for for a second and ask a very obvious question, which is, why does China actually care so much about Taiwan? And then is it even accurate to say like, why does China care about Taiwan? Should I be asking, why does Xi Jinping care about Taiwan?

Ike Freiman: Those are the two right questions to ask, and it's where we start with the book. The first thing to understand is that it's not about the chips for China. The chips are a co-benefit, but China cared about Taiwan long before they made chips, and they would care about them if they didn't make chips. Taiwan is the unfinished business of of China's civil war. Uh in 1949, as the Kuomintang, Chiang Kai-shek's government, was losing control of northern China, they began to evacuate their forces alongside all the treasures of the Imperial Palace to Taipei. And they set up a government there, essentially took over the island by force, and became, over the course of the Korean War, essentially a US ally. In 1955, Eisenhower went to Taipei. They became a critical node in the US alliance architecture. Mao obviously wanted to take this island. He wanted to wipe out the remnants of his enemy. And for him, the fact that there was this other China right across the strait, which at the time enjoyed the Chinese seat in the UN Security Council, was recognized by most of the world as the one true China, this was a fundamental question of the legitimacy of the Chinese Communist Party. And so, it became this totemic propaganda point that we will liberate Taiwan from the imperialists and in the process we will make make China whole. We will fix this historical wrong that we were separated under this century of humiliation and therefore for us to be fully rejuvenated as a civilization, Taiwan has to be brought to heel and the world must accept. It's not just about control of over Taiwan, it's about political legitimacy. The United Nations must accept, the United States must accept that Taiwan is part of China and there's only one China in the world and the Communist Party is the only legitimate government. So this is why it's sensitive. It's not just about the status of Taiwan. It's about what China means.

Joe Weisenthal: Prior to the KMT having fled the mainland, the civil war and all that, what was understood to be the status of that geography called Taiwan and how to what degree going back even prior to the civil war etc., what was its relationship to mainland China?

Ike Freiman: It depends how far back you want to go. Back in the 17th century the Dutch had a presence there. Uh as the Ming empire was falling apart, you had generals who came from the mainland. They're claimed by both sides now. You know, a couple of them became gods actually and there's temples to them in Taiwan. And essentially during the Qing Dynasty, China's final dynasty, they were a region of the province across the street on the mainland. Okay. But the Qing Dynasty's writ didn't really run there. They were settled by people from the mainland, but it was swampy and pestilential and there were indigenous people and it wasn't really actively administered by the center. The Qing pretty quickly lost control over the fringes of their empire and then the Japanese took it in the Sino-Japanese War in 1895 and the Japanese developed it. The Japanese industrialized, they left a mark on it and unlike other places that the Japanese colonized were like Korea where their colonization was brutal. In Taiwan they left relatively good feelings. So all through the first half of the 20th century when the communists and the nationalists were fighting on the mainland, Taiwan was under Japanese control. And then the question is after Japan surrendered in 1945, who did they surrender it to? Mhm. And was the status of Taiwan decided after Japan surrender? And the US position is legally it remains unresolved. It remains unresolved who Japan surrendered it to. So the US position is we don't actually take a view on what the true status of Taiwan is. All right. This is something for Taipei and Beijing to work out between themselves. And we are open to any outcome, but it has to be done peacefully. So no no force and no coercion and since Taiwan's become a democracy, it has to be democratically acceptable to the people of Taiwan. And that's a principled position which is really about the stability of the broader region because it recognizes that this region is held together through trade routes that go through international waters, international airspace. It's been stable since 1945. And if the United States starts allowing borders to be changed by force, trade routes to be changed by force, very quickly the whole regional order in this in this part of the world will collapse and this is a grave economic danger for the United States. It's a geopolitical danger. So that's the view. Yeah. And unfortunately what China's doing is they're trying to revise that situation by pushing in the gray zone, pushing through coercion and there's obviously always the risk they could escalate to war.

Tracy Alloway: I want to talk more about that, but just on the topic of I guess US policy towards China and you already touched on the one China policy, but what exactly is strategic ambiguity?

Ike Freiman: So the whole policy is sort of strange because it was never put forward by one person. It emerged through accretion. So it's like seeing a hundred bottles of beer on the wall. Like you keep adding a new lyric every time there's a new administration. So what is the components of the one China policy? Well, there's three community case, three agreements that the United States signed with China between the '70s and the '80s and those are the political foundation of our relationship with the PRC. And the language is vague and there's some key phrases that are translated differently in English and Chinese. So we get to claim that the other side said things that the other side says it doesn't say. There's a whole lot of that. Uh but basically the United States position is we will have a relationship with the PRC. We will treat Beijing as the sole legitimate government of China, but we will maintain for all practical purposes an informal relationship with Taiwan as if it were a country just not technically, not de jure. And this has been reaffirmed by Congress which in 1979 passed the Taiwan Relations Act that makes very clear that it's the sense of Congress that we should treat Taiwan as a state in basically every respect except for these some of these formal, very high-end political and military interactions. And then in the Reagan administration, we made some extra commitments to Taiwan called the Six Assurances and they basically reduced to we will not force you to the negotiating table. We will not trade you away. In other words, you will never face pressure from us to take a bad deal. Mhm. And what this policy adds up to has been called by political scientists dual deterrence. We want to deter Taiwan from declaring independence or doing something provocative that might trigger a crisis and we want to persuade Beijing that if it intervenes, it might face a devastating reaction, but that they don't have to worry because Taiwan is also deterred, so they can take their time and hopefully if we deter both sides from doing something extreme, we can encourage them to resolve their differences peacefully. So that strategic ambiguity is the not saying exactly what we would do or under what circumstances. The tricky thing is that was a great policy when we had overwhelming economic, technological and military advantages. That is no longer the case. We probably could defeat China in a high-end conventional war and we can go into why. If we put sanctions on China, we could probably cause a greater GDP hit in China and we can go into why, but the cost to us and the risk to us as Americans is just going up up up as the relative balance shifts. And so now it increasingly seems like it's a get out of jail free card even if it isn't.

Joe Weisenthal: Quick question. I know basically nothing about Taiwanese domestic politics. Am I wrong though? I feel like I read somewhere it's like the KMT, the success they and they were the revolutionaries. Aren't they the more dovish of the parties in relations with Beijing and don't aren't they the party that seems to be a little bit softening of the stances of the future and maybe, you know, uniting the two sides a little bit. Am I wrong about that?

Ike Freiman: No, that that's absolutely How is that possible? It's How nerdy do you want to get? So here's the thing. I I mentioned that the dispute is largely about what China means. Now that question continues. The Kuomintang, the KMT, which is the successor of uh Chiang Kai-shek's party, they believe that they're still the legitimate representatives of the true China. The entire thing. Well, they recognize that there's a free China and an unfree China. Okay. And I think they've long since given up their aspirations of raising an army and going back across the strait and taking over the mainland, but I think they have an aspiration that one day this this divided China can be unified either in some kind of confederation structure or who knows, maybe with the KMT on top. And they identify culturally, historically, civilizationally as Chinese. Yeah. They say we we're Chinese, we just happen to live on Taiwan, but we're one civilization, one nation. And the KMT's point of view is that we one China respective interpretations. And on that basis, Beijing is willing to talk to them because they disagree about one China mean what one China means, but they both believe in principle that there is only one China in the world and Taiwan's part of it. But the current ruling party in Taiwan, the Democratic Progressive Party or the DPP, they have a different perspective. They say we are a country called Taiwan. We're one of the most technologically advanced places in the world. We are a thriving democracy. The world needs our chips. You know, we are at the center of this security architecture. So they just see themselves as a distinct nation. We are a distinct nation and we should be recognized by the world as such and they're not suicidal. They're not crazy. They recognize that if they declare independence, that this could bring the hammer down on them. But their point of view is we will never declare independence because we already are. And Americans I think will about to have to learn this lesson because Taiwan is going into a presidential campaign and it is far from clear where the wind is blowing. And the United States will have to work with whoever wins because that's what it means to have a partner that's a democracy. But these two parties have very different points of view and one of the points I make in the book is we need to learn to handle Taiwan's domestic politics. We are two democracies respond to one another. For example, I think the KMT, if they come back to power, will be much less interested in helping America reshore chip production. And they're also probably much less interested in doing military cooperation with the United States if that's going to inflame China. I I I think basically you can think about it this way. The DPP believes that the relationship with the United States is the most important thing. That we matter to them just as they matter to us and that if Taiwan gets in trouble, America will come. And the KMT views are diverse, but they tend to have the view the cavalry might not be coming. The Americans might be using us as a pawn in a bigger geopolitical game, but can we really trust them? And we don't want to become Ukraine. So maybe the best approach is to negotiate. And these are two very different points of view. They're both Yeah. Plausible interpretations of the facts and the United States has to learn to deal with both sides.

Tracy Alloway: I want to ask you more about reshoring, but since we're on the topic of domestic Taiwanese politics, one thing I've always wondered and I'm curious if you maybe got some color on this in the course of your research, but one of the reasons, it's not the only reason, but a big one, one of the reasons Taiwan is strategically important is because of the semiconductor business and the presence of TSMC and companies like that. What role does a TMC play in Taiwanese domestic politics?

Ike Freiman: It's hugely, hugely important. It's only a couple of percent, the semiconductor industry, depending on how you define it, with related services industries. It's something like 5% of employment in Taiwan. But it's an outsize share of Taiwan's exports. Yeah. And right now just if you look at the macro data, Taiwan's exports are booming because no one can get enough of their chips. There is an entire ecosystem of universities, vocational training centers, companies that supply to TSMC. This is a national champion in so many ways and they get tax benefits and subsidized land and Taiwan's political economy is organized around making them a success just as South Korea's has been organized around making Samsung and others a success. TSMC is smart enough to know that it has to deal with it administrations of both parties. But TSMC is also caught in a US-China tension, too. And TSMC doesn't share the United States political objectives here. TSMC is happy to sell to China. They don't have a problem if China buys lots of their chips. But they have to work with the United States because ultimately they are fabricating chips at the high end that are made with US designs. So the US does have the ability to export control where those final products go.

Joe Weisenthal: This is really interesting and important and I hadn't thought about this dynamic. I mean, I guess it sort of makes sense to me that like if I were like the leadership in Taiwan, I don't know if I would be like that thrilled about our main company opening up fabs in Arizona, etc. But I guess it sort of makes sense like okay, you know, we the US is a pretty important partner. But what I'm wondering, you know, like in a future scenario, so going back to Reagan and it's like we're not there's doctrine, we're never going to put pressure on you to like accept a bad deal. What if over time organically a new generation of sort of more sympathetic like main mainland voters like they grow up, they look at the world, they see maybe the US sort of looks like a belligerent power sometimes, etc. They look at China and it seems looks like they're doing a lot better. They're not as poor as they used to be. They look pretty stable, etc. Like could Taiwan just sort of migrate closer to the Chinese sphere or perhaps even merge back into China organically? is that a is that something that like US policy like feel like do we feel that we have to prevent that if that's sort of where the democratic action in Taiwan goes?

Ike Freiman: Well, our long-standing policy is that it's the it's the right of the people of Taiwan to decide their own future. And that's a principled position that we hold for a reason that is also self-interested. Which is if Taiwan decides that they want to submit or they want to take a deal and they want to unify with the mainland. By the way, the mainland uses this term reunification. That's a weasel word. Taiwan has never been subject to the People's Republic of China in its history. But if Taiwan becomes unified as part of China, what's the United States going to go in? What what are we going to go in and topple the government? We're going to tell them no? That they should have self-determination to decide. And that is one reason why it's a no-brainer to start to build a semiconductor manufacturing base in the United States and Japan and other allied countries because there's any number of reasons to doubt whether we have assured access in the long term to Taiwan's chip supply. And if this is the most essential bottleneck to the development of frontier AI, then we cannot put all of our eggs in that basket. So the younger Taiwanese tend to lean more towards the DPP historically. In polls, they tend to identify as I'm Taiwanese only. Very few of them will say I'm Chinese only. An increasing number will say that I'm Taiwanese only, although many will say I'm both Taiwanese and Chinese. Chinese in the sense of culturally, civilizationally Chinese, not Chinese in the sense of People's Republic of China Chinese. And I think these dynamics are affected by what the mainland does. China is I think perfectly happy, Xi Jinping would be perfectly happy if Taiwan would sign a piece of paper that says I accept one country, two systems Taiwan plan. Which is to say I accept your principle that there's only one China and we're part of it and you're the legitimate leaders and we will get a Hong Kong style arrangement where we get to keep our laws, our institutions, our democracy. We get some freedom of expression, freedom to organize. We we have our get our fancy passports that have visa-free access to all these countries, all these perks. And maybe Beijing will give them free energy, so other subsidies, other perks. That is the offer that's on the table for Taiwan. But it's become a whole less lot less attractive now that Taiwan has watched what happened to Hong Kong because Hong Kong took that deal and it was all right until people in Hong Kong started to object to the CCP's encroachment on their institutions and their freedom to organize and speak out. And what ended up happening is Xi Jinping sent in masked thugs that brutalized people, rounded them up, you know, disappeared people in the night, terrorized the population and crushed them into submission. So I think Taiwan has understood since 2019 that if they take one country, two systems, it's the slow beginning of the end of their democratic institutions and their freedom. It is not a is not a deal that they would take, I think, willingly. But if they feel that the United States and the rest of the world isn't backing them up and their offer their Beijing essentially says, you want to do this the easy way or the hard way. I can imagine a world in which they choose the easy way. And this matters because we're not just talking about peacetime. We're also talking about crisis scenarios. There's all kinds of things that China can do to dial up the pressure. They can mobilize their forces in the Taiwan Strait for a potential invasion. Oh, it's just an exercise. It's just an exercise until it's not. They can start to curtail the flow of goods and planes coming to and from Taiwan. They can start to ask for manifests. Who's on the plane? Oh, so sorry. Ike is on the plane. Could you make a pit stop in Shanghai? We want to ask him some questions. There's so many ways that Beijing can turn up the pressure. They probably have special forces United Front people on the ground in Taiwan. They can do cyber attacks against Taiwan critical infrastructure. They can blanket the island with rather with propaganda. There's so much things that China can do to put the pressure on and try to drive wedges between Taiwan and the United States and Japan. And in those moments, what is the US political strategy? Yeah, we have a military strategy if they turn to an invasion, but what is the political strategy if the markets start to panic? If we think we may need to get our American citizens out. And these are the scenarios I argue in the book that we haven't yet fully thought through.

Tracy Alloway: In your framework, what's been the big constraint on Xi Jinping so far historically? Like why hasn't he done something on Taiwan yet?

Ike Freiman: Well, we don't know. We have to speculate. One reason is that the People's Liberation Army, the PLA, I think it's fair to say up until recently and probably still now lacks the ability to take and hold Taiwan by force. Back in 1949, after Mao took over the mainland, the first thing he did was he told his generals, now give me the plan to take Taiwan. And they studied it and they concluded, "Sir, it can't be done." This is one of the hardest waterways in the world. There's crazy tides. There's enormous waves. There's 50 mile an hour winds. There's typhoons. There's fog. And there's only a few landing beaches that are plausible and Taiwan knows what those are. And now they have spent the better part of a century fortifying them. So if you want to get all of your men across the strait, you have to deliver them by sea or by air. And air is difficult as Ukraine has shown. It's easy to shoot down helicopters and planes. And so you need to take them in these amphibious ships which can be sunk by mines or cheap drones or artillery. And then you have to get them into the shores, and then you potentially have to sustain them for a long period of time. You need to give them uh vehicles and ammo and fuel and food and medicine. And what happens if you successfully deliver 15,000 troops to the shores and then your logistics tail gets cut because a number of your amphibious ships end up on the bottom of the Taiwan Strait. And then your men are massacred on the beaches. So many things have to go right in a highly synchronized way for an amphibious invasion to work, such that D-Day, which is the great example in history where we had all these advantages that China wouldn't have today. Very, very almost it came very, very close to going completely off the rails, as I discussed in the book. So, Xi Jinping is systematically building the capabilities he would need. He's building out this amphibious fleet. He's building better anti-submarine warfare to force us back. He's building longer-range ballistic missiles that can target ships to force our aircraft carriers to stay further back from the conflict zone. He's building out his air force and drones, cyber tools, all these things to coerce Taiwan. But if you rolled the dice on an invasion today, I think, at least if you look at the public war games, uh it is possible that he would suffer a pretty catastrophic defeat. So, that's one reason for patience.

Joe Weisenthal: So, one of the things you used to hear a lot more, and I don't think you hear it nearly as much nowadays, but this idea of economic pain, right? If China invaded Taiwan, there would be some sort of retaliation, maybe sanctions, something like that. And because the CCP had built its legitimacy on the social compact with its population, which was basically, you know, we're in power and in exchange you all hopefully get rich, that was just untenable for for Xi Jinping and other policy makers. You don't hear that that much anymore. And I wonder I wonder why that is. Is it just because like people feel that China has reached the level of economic development where like, okay, the legitimacy has been established in terms of the social compact, or is it because we had an example of Russia invading Ukraine and very obviously being willing to trade off that military action even though it generated an enormous amount of economic pain for the country.

Ike Freiman: It's a whole bunch of factors at once. Xi Jinping has overseen a transformation in the social contract in China. From development to ideology and national security. From the anti-corruption campaign to his ideological rectification campaigns to rewriting the history textbooks to taking Communist Party cadres to historical sites to study points of hardship in party history. Xi Jinping uses this term struggle to describe what the party should do. And he has told young people they can't find work that they should eat bitterness. The idea being you should tough it out. We are a nation striving for national rejuvenation. National rejuvenation means rising to the height of human achievement in every human endeavor. And to do that, we're going to work hard and we're going to make some sacrifices. And he has tightened surveillance. He has tightened discipline that allows him to run this regime according to a very different set of rules through coercion. And that means we have to assume that China's tolerance for economic pain has increased. Now, at some point there's a limit. If the financial system were just to implode under the threat under the threat of sanctions or because there's just mass capital flight, because no investor wants to be stuck in illiquid assets in China if the US and China are headed to war, yes, there's possible that China could suffer a sudden, you know, black swan collapse. But I think that's not base case. And I have a work that I describe in a lot of detail in the book about how over the last 10 years, China has been systematically building shock absorbers into its financial system to make it more likely to survive the gut punch of the imposition of sanctions. And the fact that Russia's financial system which had many it lacked many of these advantages was able to steady itself after the imposition of sanctions is I think an encouraging sign. Just a couple of numbers to bring us home. At the beginning of the Russia-Ukraine war, Russia was blindsided that the Europeans joined all the sanctions. They had moved a lot of their central bank assets from dollars into euros. And then the Europeans froze those assets, which meant suddenly half of their foreign exchange reserves were just inaccessible to them. That was a huge boo-boo for the Russians. And then the sanctions regime targeted uh Sberbank and other major banks in ways that had not been expected. So, the ruble lost something like half of its value in a couple of weeks. And there was a real risk of Russian collapse. But with only 300 billion dollars of foreign exchange available, they were able to right the ship because they limited they imposed a capital control regime. They limited outflows from banks. They raised interest rates to 20%. They demanded that state enterprises take payments in rubles. All of these things to increase demand for rubles and keep the banks solvent. And then you know, foreign hedge funds that had profited on the ruble short took a look at the situation and they said, "Well, are there more sanctions coming?" Well, if the answer is no, then it's all priced in and the ruble looks pretty cheap because actually Russia's imports have just collapsed and their exports are booming because the oil price is up. And then in April of 2022, the ruble was the best-performing currency in the world. And then the ship was steadied and then it the economic war became an attritional contest that we have not won yet. And I think there is a similar dynamic with China. There is some possibility that their financial system could implode, but China, if you count their shadow reserves, has between between 10 and 20 times the FX that was available to Russia. They have an existing capital control regime. All the banks are run by the state. And if they survive that gut punch, they have the stockpiles to live on their own supply for many, many, many months if they're entirely cut off from imports. So, the question is, if we can't defeat them economically slowly, how do we think about the long-term contest of economic pain such that it is something that we as a coalition of democracies can possibly win? And the answer I come to in the book is we have to stop thinking about it as punishment. Stop thinking about it how we could hurt China in a way that hurt us, too. We need to think about what are the things that we would want to do in our own best interest in a crisis to secure our own economic interests that would just happen to hurt China as a byproduct.

Joe Weisenthal: Just real quickly on cutting off imports, are they good on oil? For like this is we know they have this big oil stockpile. War would be extremely oil-intensive process.

Ike Freiman: You know, they've electrified a lot of cars. I doubt their military is nearly as I think they're good I think they're good on oil. So, they in peacetime, Yeah. they consume, what is it, 13, 14 million barrels a day, of which around four are produced domestically. If they became cost insensitive, which they would be in a in a crisis, they could probably squeeze that up a bit. They also can import overland. They import, you know, a couple of million barrels a day overland. And if they had to, they could import more by land. Yeah. Okay. be comfortable. It wouldn't be cheap, but if they would have willingness to pay, they have plenty of foreign exchange. They could also do as the Nazis did, which is turn coal into fuel oil. Yeah. Fischer-Tropsch, it's been done in the past. The Nazis declared war on all their oil suppliers and they still managed to fight through 1945 pretty effectively. But there's more to this. They've got They declare, what is it, 1.3 billion barrels in their SPR? They probably have something more like two. And then they can make the civilian economy ration. The PLA would use something like 500,000 barrels a day. So, if you run the math, and I just do the back of the envelope in the book, what matters is not that they would run out of oil eventually. At some point they would feel the squeeze. But our allies, Japan, South Korea, Taiwan, would feel the squeeze much faster. So, our coalition as currently set up, doesn't have the advantage in a long-term contest of extreme economic war. And it's not just about oil, it's about everything else. They have stockpiles of cotton. They have stockpiles of chips. They have stockpiles of everything plausible that they might need. Taiwan doesn't have that. Japan doesn't have that. So, this is the risk that they take us up to the brink. We are forced to contemplate what the long-term economic war looks like. We realize that if they can last for 12 months and we can last for three, that's not a game we want to play and we fold. And then if that is established, they can coerce us. And this is not just about Taiwan. This goes far, far, far beyond Taiwan. This is about our entire alliance architecture in the region. And frankly, this is about our hemisphere, too.

Joe Weisenthal: Just real quickly, I think you mentioned at the beginning that you actually think currently in a conventional war that the American military would have the upper hand. I don't, but like, you know, it looks like I don't know what's going on with Iran and I'm very susceptible. I will watch all the Chinese propaganda. I watch the military praise like, that looks really impressive. The robot dogs and all this stuff. I'm pretty Oh, the robot dogs. Yeah, like can you just give me the short version of why as of April 21st, 2026, you think the US military still has the upper hand?

Ike Freiman: This is something I learned in the process of working on this book and then the previous book, this is a companion book called The Arsenal of Democracy, which is all of the military nuts and bolts that my editor was like, no way you're putting this in. This that's too nerdy. But, what here's what I discovered in researching that book. The wars that America has fought over the last 80 years have been land wars. And land war has a certain character. And war at sea has a totally different character. And the basic reason is that war on land involves lots and lots and lots of units that are basically interchangeable. And so, it's attritional. You're wearing each other down. You're fighting along a long line. You're applying pressure and there's an equilibrium and a balance and you're basically trying to hold up enough reserves with potential energy to punch through the enemy's line and then send in the cavalry and their line collapses and you ride to victory. So, if you look at the maps of World War I, for example, the line doesn't move. It doesn't move. It doesn't move. It doesn't move and then it breaks. War at sea is different. You have a very small number a much smaller number of platforms and they're much more specialized. And so, if you can take out just one or two of the enemy's vessels, specialized aircraft, specialized ships, the whole uh structure starts to collapse. And the rest become easier to kill. And that means that there's no real incentive to hold back reserves. Once the engagement starts, it's incredibly intense and it's often decided in the first hours to days. And one significant implication of that is your ability to see and communicate across the battle space is really, really critical. And especially as our the range of our missiles and our drones has increased, that means that US aircraft and ships and submarines that could potentially strike targets in or around China can be zooming around across literally millions of square miles of ocean. So, to see these things, to target them, and then to deliver mass to a target to kill them is no easy feat. And if the US can use cyber, counterspace capabilities, and so on to disrupt China's ability to see and communicate in those critical early hours, then it could potentially win a lopsided victory or vice versa. And one of the implications of that is if you're just counting ships or counting planes or missiles, you will miss the parts of the balance that are most important, that are actually qualitative, many of which can be augmented with AI. And this is hard because it means when you're wargaming these things, if you're don't have a clearance, you kind of have to make it up with these capabilities. We don't know what the cutting edge of cyber is, for example. Only a very small compartmented group of people within the national security establishment know all of the relevant capabilities. But, I I would I just think that if China believed that they could defeat the US in a high-end war, they would be behaving more assertively. They would be operating not just in the Taiwan Strait, but all around the region in a way that they're not yet.

Tracy Alloway: We started this conversation talking about, you know, the famous hypothetical blockades um in geopolitics and international relations classrooms around the world. Um what's your big takeaway from the Strait of Hormuz situation as it applies potentially to China and Taiwan?

Ike Freiman: It's a good wrap-up for the conversation, really. It's the United States military has these god-like capabilities with special forces, with cyber, electronic warfare, in some senses the way our air defenses have performed, which is exceptionally exceptionally well. But, while our military is very good at doing the operational military stuff, we are not succeeding at the strategic level. Because ultimately, war is the continuation of politics by other means. And our politics is susceptible to economic pressure in a way that our adversaries is not. And if we don't if we don't get the message, if we don't take the wake-up call, and start working on our economic resilience and our credible ability to bear economic pain and supply chain disruptions and the rest, we will be unprepared on exam day. Because China has so many more capabilities to impose economic pain on us and to micro-calibrate the character of that economic pain than Iran does. And they have more ability to do it for a long period of time in multiple theaters and parts of the world. And we can only deal with this problem if we treat it as it all of government interdepartmental problem, not just a military problem. And if we work with allies, and if we try to make some kind of bipartisan consensus that national economic resilience matters. That to me is the lesson of Hormuz.

Tracy Alloway: All right. On that cheerful note, Ike Freiman, thank you so much for coming on Odd Lots. And the book is Defending Taiwan: A Strategy to Prevent War with China. Really appreciate it. Thanks so much for having me on. Thanks so much, Ike. That was great.